26 Jul 2022

Parliament on Monday July 25 passed the Bank of Botswana Amendment Bill, 2022 (Bill No. 11 of 2022) that seeks to promote operational independence and improve the governance of the bank.

Presenting the bill for the second reading, Minister of Finance, Ms Peggy Serame said there was need for the Bank of Botswana Amendment Act, whose major review was undertaken in 1996, to be amended to cater for emerging issues.

“Some of the provisions in the current act are outdated and it was necessary to amend the act to cater for emerging issues,” she said.

She noted that the review process, which included consultations with the International Monetary Fund (IMF), took the Southern African Development Community (SADC) model law and other emerging developments into consideration. She said the drafting process was also done through consultations with Botswana stakeholders.

She noted that it was done to ensure a strong legislation for the bank, as one of the county’s key economic institutions.

“I wish to underscore the importance of a robust central bank legislation as a basis for the establishment of and operation of a central bank as one of the key economic entities in the country. 

The central bank legislation is therefore critical in ensuring issuance and protecting the value of the currency through currency operations, monetary policy, exchange rate management, regulation of relevant financial institutions and sound payments and settlements frameworks,” she said.

Among other amendments, the minister said clause 4 of the bill amended the act by inserting three new sections relating to the operational independence of the bank, functions of the bank and its powers to issue directives and circulars. 

She also noted that clause 5 substituted section 5 of the act by increasing the authorised capital of the bank from P25 million to P150 million ‘to ensure the financial solvency and sustainability of the operations of the bank.’

Additionally, she said clause 8 of the bill broadened functions of the board to enable it to carry out more duties. 

“Clause 8 amends section 8 of the act by broadening the functions of the board which shall include the power to approve the budget of the bank, assess risks and formulate contingency plans for the operations and security of the bank,” she noted.

She said clause 13 amended section 13 by limiting the reappointing of the governor to a term not exceeding five years, among others. “The subsequent clause amended the act by inserting a new section on powers and functions of the governor,” she said.

Key among other amendments, she noted, was clause 22 which amended section 29 of the act by increasing the penalties for photocopying or reproducing bank notes from P1 million to P10 million. 

Furthermore, she said clause 28, which amended section 41, increased the penalties from P50 000 to P100 000 for failure by a financial institution to comply with regulations provided for interest and credit, or supplies false information to the bank. The same clause further increased penalties for prohibitions on lending to the government from P5 000 to P10 000.

Debating the bill, Selebi Phikwe West MP, Mr Dithapelo Keorapetse said he supported the bill since he believed that if properly implemented, the proposed amendments would ensure the independent operations of the central bank mandated to responsibly control the monetary policy with no government influence.

“We hope that the Bank of Botswana will as a result of the amended law, not be subjected to any form of control by the executive or other agencies,” he said.

He also said there was need to limit terms of board members in order to align the bank with good governance practice.

Mr Keorapetse, who is also the Leader of Opposition (LOO), said the bill had to clearly define the operational independence of the bank. He underscored the need to deploy good corporate governance in sourcing money printing services for the bank to ensure transparency and accountability.

“We have also suggested that high corporate governance standards should be adhered to in appointing companies to print money for Botswana,” he said.

Also supporting the bill, Kgalagadi North MP, Ms Talita Monnakgotla said it was important for the law governing the Bank of Botswana to be reviewed to keep up with emerging developments and challenges. 

She said the bank had to be independent in executing its mandate as an integral part of the country’s economy.

“I also concur with the proposal that board members should have a limited term to promote good governance,” she said.

Following debates by MPs, the bill went to the committee stage where there were no amendments to all the clauses. Consequently, it progressed to the third reading the same day where it was passed by Parliament. Ends